End of Financial Year Tax Strategies
Ten End of Financial Year Tax Strategies
As we head towards the End of Financial Year, our thoughts turn to ‘tax time’ and how we can best optimise your position.
We have put together a list of year end items for you to consider:
- Review your investment portfolio to determine whether investments should be sold to offset any capital gains or losses made throughout the financial year.
- Make sure you get Capital Gains Tax Concessions by holding onto assets for more than 12 months where possible.
- Maximise tax deductions through super contributions. Alternatively, make a contribution into super for your spouse – this could provide you with a tax offset.
- Income Protection policy. The premiums are tax deductible, so make sure you claim it.
- Borrow to Invest through home equity loans, margin lending, or protected equity loans and pre-pay the interest to reduce your assessable income. We do not see borrowing to invest as a tax strategy. The treatment of deductible interest verses capital gains makes it easier to generate positive results.
- Review income distributions through family trusts. You can lose franking credits in some circumstances if a family trust election is not made and you need to provide details of how the trust income will be distributed before year end.
- Make a tax-deductible charitable donation. With the end of financial year approacing you can reduce your taxable income by supporting a charity of choice by making a donation.
- Make a non-concessional contribution to super. Opportunity to utilise the $300,000 bring forward rule (if under 65 on 1 July 2017) or alternatively $100,000 per member.
- Review tax deductible items and sort through receipts. Work related expenses, such as training courses relating to current employment or uniforms can be deducted for tax purposes so make sure your records are up to date.
- Private health insurance offset. Depending on your income and age, you may be eligible for a tax offset on your health insurance. If you haven’t claimed a reduced premium from your health fund, then you can claim an offset in your tax return.
- Instant Asset Write-Off for small business. Between now and 30 June 2019, small businesses can immediately write off any asset purchase costing less than $30,000. It is not a cash hand-out but a deduction from your taxable profit.
Other super measures for consideration
- The downsizer contributions measure will allow an individual aged 65 or over to use the proceeds in relation to one sale of their main residence to make ‘downsizer contributions’ of up to $300,000 (or $600,000 for a couple) into super. To be eligible, the contract for sale, not the settlement date, must be entered into on or after 1 July 2018 and you need to have owned the home for 10 years.
- From 1 July 2018, an individual can start to carry forward the unused amount of their Concessional contributions cap for up to five years. The first year in which the individual can access the unused Concessional contributions is the 2019/20 financial year and the member’ total super balance must be under $500,000 at 30 June of the previous financial year.
Please contact your adviser on (03) 9629 1100, if you require any clarification or further information on any of these strategies.